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Managerial Accounting Assignment Help

Question 2 – Week 3 (7 marks) 

  1. Total manufacturing cost for 150 Coffee table
  Job No. X10
Direct materials used                                   22,800 
Direct Labour used (600 *16)                                     9,600 
Applied Factory Overhead (30*400)                                    12,000 
Total manufacturing cost for Job No. X10                                   44,400 
  1. b) Calculate the cost per coffee table for Job No. X10?
Total manufacturing cost for Job No. X10 (A )                                   44,400 
Number of Coffee Table ( B )                                         150 
Cost Per Coffee Table (A/B)                                         296 
  1. c) List two uses of this unit cost information to the managers at Tik Tok Company.
  • Company can determine break even point  and level of profit.
  • Per unit cost helps in determining key cost drivers which increase overall cost of production. 

Question 2 – Week 5

  1. Calculations for activity rates for each of the overhead items
           
Activity Cost Pools Cost Drivers Estimated Overhead (A ) Expected Use of Cost Drivers ( B ) Activity Rate (A/B)
Purchasing Number of orders 1,200,000 40,000 30 Per Order
Machine setups Number of setups 900,000 18,000 50 Per Setup
Machining Machine hours 4,800,000 120,000 40 Per Machine Hour
Quality Control Number of inspections 700,000 28,000 25 Per Inspection

Here is the calculations showing activity rates for overhead items. For purchasing activity the rate is $30 per order, For Machine setups and Machining $50 per set up and $40 per Machine hours respectively. Quality control costs $25 per inspection. 

  • Using the rates in (1) determine the unit cost for TRI-X.
Calculation of Overheads applied
Activity Cost Pools   Activity Rate (A ) TRI-X Product ( B ) Applied Overheads (A*B)
Purchasing 30                                     17,000                                                    510,000 
Machine setups 50                                       5,000                                                    250,000 
Machining 40                                     75,000                                                3,000,000 
Quality Control 25                                     11,000                                                    275,000 
Total Overheads applied (A )                                               4,035,000 
Number of Units manufactured ( B)                                                     26,000 
Overhead Unit Cost (A/B)                                                         155.19 
Direct Materials 700.00
Direct Labour ($20/hour) 120.00
Overheads applied                                   155.19 
Total Unit Cost of TRI-X                                   975.19 
  1. Calculate the Gross Profit  on the Product TRI-X
Selling Price Per Unit 1600.00
Less Unit Cost                     975.19 
Gross Profit Per Unit                     624.81 

The selling price of TRI-X  in the market is $1600 per unit , as per the cost drivers and activity costs the total unit cost will be $975.19  which means  gross profit from the sale of goods  will be $624.8.

Question 3 – Week 6

  1. Cash receipt budget schedule , include total receipts per month
Cash Receipt Budget

 

 
Particulars July  August  September  Total 
Total Sales (A)                                 140,000                                  210,000                                                    280,000                      630,000 
Immediately Collected ( A *15% ) =( B )                                   21,000                                      31,500                                                      42,000                        94,500 
Less Cash Discount (B* 4%)                                         840                                        1,260                                                        1,680                          3,780 
Cash Collected from Immediate  (B – C ) =(D )                                   20,160                                      30,240                                                      40,320                        90,720 
One month later (A *25%) = ( E )                                     35,000                                                      52,500                        87,500 
Two months later ( A *40%) = ( F )                                                     56,000                        56,000 
Total  Receipts (D +E +F)                                   20,160                                    65,240                                                    148,820                      234,220 

Working Note

                                                                                                        Sales Budget
Particulars July August September Total
Number of Units Sold                                     1,000                                        1,500                                                        2,000                          4,500 
Selling Price Per Unit                                         140                                          140                                                            140                              140 
Total Sales                                 140,000                                  210,000                                                    280,000                      630,000 
  1. Prepare a material purchases budget schedule for each of the first three
                                                      Material Purchases  Budget
Particulars July  August  September  Total  October
Budgeted Production                                     1,450                                        1,650                                                        2,120                          5,220              2,460 
Add Ending Inventory @20% of next month                                         330                                          424                                                            492                              492 
Total Requirements                                     1,780                                        2,074                                                        2,612                          6,466 
Less Beginning Inventory                                           –                                            330                                                            424                                –   
Number of Units to be Purchased                                     1,780                                        1,744                                                        2,188                          5,712 
Direct Material Cost Per Unit                                           60                                            60                                                              60                                60 
Total Direct Material purchased                                 106,800                                  104,640                                                    131,280                      342,720 

Working Note

                                                                                                    Schedule of Payment of Material Budget    
Particulars July  August  September  Total 
Total Direct Material purchased                                 106,800                                  104,640                                                    131,280                      342,720 
Payment made in the following month                                 106,800                                                    104,640                      211,440 
Total Payments made for Purchases                                           –                                    106,800                                                    104,640                      211,440 
  1. a cash budget for the month of July. Include the owners’ cash 
                                                                Cash Budget 
Particulars July  August  September  Total 
Opening Balance                                 250,000                                  194,810                                                      52,650                      250,000 
Total Receipts                                   20,160                                      65,240                                                    148,820                      234,220 
Total Cash Available ( A )                                 270,160                                  260,050                                                    201,470                      484,220 
Less Payments
Material                                           –                                    106,800                                                    104,640                      211,440 
Labour                                   14,500                                      16,500                                                      21,200                        52,200 
Variable Overheads                                   18,850                                      31,600                                                      39,110                        89,560 
Fixed Overheads                                   42,000                                      52,500                                                      52,500                      147,000 
Total Payments ( B )                                   75,350                                  207,400                                                    217,450                      500,200 
Ending Balance (A -B)                                 194,810                                    52,650                                                    -15,980                      -15,980 

Question 2 – Week 8

  1. a) Using the general rule, determine the minimum transfer price.

When any manufacturing concerns are having factory outlets in more than one places  then they can transfer goods from one outlet to another  at transfer pricing. That transfer pricing  is the sum of  variable manufacturing costs and shipping cost and opportunity costs associated to the product. The calculation of transfer pricing are as follows: 

= $3.00 + $0.20 + $0.50 ($4.00-$3.50)

= $ 3.70

  1. b) Assume the Bottle Division has no excess capacity and can sell everything produced externally. Would the transfer price change?

When Bottle division consume  everything from the external sources then  transfer pricing would change  as goods generated internally and goods purchased from external channels have different costs  and vary  a lot.

  1. c) Assume the Bottle Division has no excess capacity and can sell everything produced externally. What is the maximum amount Perfume Division would be willing to pay for the bottles?

If Perfume division is going to purchase goods from bottle division which  sells products externally produced then Perfume division has to pay $4.00  per unit. As it is consuming goods which is produced externally not within same organisation.

  1. d) When is it more appropriate to use market-based transfer price rather than cost-based transfer price?

If there are two options cost based transfer price and market based transfer price, then market based transfer pricing is most simplest and elegant method. Company can earn highest possible profit rather than abnormal profit as per the regular  or mandate pricing schemes.

Question 3 – Week 10

Particular Alpha Beta Gama Total
Selling Price Per Unit 250 400 1500  
         
(-)  Variable cost Per Unit 80 200 800  
         
Contribution margin per unit 170 200 700  
         
Sales Units 12000 6000 2000 20000
         
Contribution margin 2040000 1200000 1400000 4640000
a. Weighted average contribution Margin       232
b. BEP       21551.72
c. Margin of safety       24999

Working Note 

Contribution Margin = Total contribution margin of Sales mix/ Number of sales units

Break Even Point Fixed cost/Contribution Margin per unit
Margin of Safety Actual Sales- Break Even / Actual sales
Projected Sales  25000
Total Annual Fixed Costs 5,000,000

Question 3 – Week 11

Particulars  80000 units For overseas selling Price (10000 units) 90000 units
Direct Material  57 57  
Direct Labour 60 60  
Variable Manufacturing Overhead 16 16  
Fixed Manufacturing Overhead 30 30  
Variable Selling and Administrative Costs 10.2 19.2  
Fixed Selling and Administrative Cost 27 27  
Import and Other Duties Cost   4.2  
Total Unit Cost 200.2 213.4  
Total Cost 16016000 2134000 18150000
Selling Price 240 242.6  
Selling Unit 80000 10000 90000
Total Sales 19200000 2426000 21626000
Profit 3184000 292000 3476000

Estimation of profit on the basis of 80000 units produced

Profit Percentage = 20

Profit For 10000 units = 42.68

  2. (b) Cost for selling damaged goods

There are 200 units of finished goods remaining as inventory with the company from last two months. The goods are now damaged due to environment and natural conditions, now if the company wants to sale them in market. Now, these goods are considered as damaged goods.  The feasible approach  for deciding  the selling price of the goods is the price offered by  market or cost of manufacturing  whichever is high.

  1. (c) “All future costs are relevant in decision making.” Do you agree? Explain. 

Future costs are pre decided costs for transactions in present time period. Yes, these costs are relevant for decision making. If any contract  between  parties are formed related to future transactions then it is good if in the contract future costs should involved because costs are changing with the pass of time and if future contracts are based on traditional pricing then no party will gain profit.  For recovery of cost and generating  profit , it is good  for making  contracts  on the basis of future cost.

References:

Accounting Tools. (2020). Transfer Pricing. Accountingtools.com [online]. Available at: https://www.accountingtools.com/articles/2017/5/16/transfer-pricing. [Accessed on 06.10.2020].